Genco Shipping & Trading Ltd. (GNK) PriceWatch Alert Could Hit 20.06% Return

Posted: Monday, May 11, 2009 8:07 AM EDT
By: Market Intelligence Center Staff

Genco Shipping & Trading Ltd. (NYSE: GNK) ended the last trading session at $19.69. So far the stock has hit a 52-week low of $6.43 and 52-week high of $84.51. Genco Shipping & Trading stock has been showing support around 17.85 and resistance in the 21.41 range. Technical indicators for the stock are Bullish. GNK appears on the Investors Observer Stocks In The News list. Maxim Group downgraded GNK Friday to Hold from Buy. For a hedged play on this stock, look at a Jan '10 12.50 covered call (ZGV AV) for a net debit in the $10.99 area. That is also the break even stock price for this trade. This covered call has a 250 day duration, provides 44.18% downside protection and a 13.74% assigned return rate for a 20.06% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the GNK Jan '10 7.50 Call (ZGV AU) and selling the Jan '10 12.50 call (ZGV AV) for a $4.00 debit. The trade has a 250 day life and would provide 41.59% downside protection and a 25.00% assigned return rate for a 37.00% annualized return rate (for comparison purposes only). Genco Shipping & Trading does not pay dividends at this time. [For more information on these strategies along with more details on possible risks go to www.iotogo.com/HPWAinfo]